Oil drops 13% in worst day of 2021, breaks below $70 as new Covid variant sparks global demand concerns
Oil posted its worst day of the year on Friday, tumbling to the lowest level in more than two months as the new Covid-19 strain sparked fears about a demand slowdown just as supply increases.
The leg lower came amid a broad sell-off in the market with the Dow dropping more than 900 points. The World Health Organization warned Thursday of a new Covid variant detected in South Africa. It could be more resistant to vaccines thanks to its mutations, although the WHO said further investigation is needed.
U.S. oil settled 13.06%, or $10.24, lower at $68.15 per barrel, falling below the key $70 level. It was the contract’s worst day since April 2020. WTI also closed below its 200-day moving average — a key technical indicator — for the first time since November 2020.
U.S. oil is now down more than $15 since its October high of $85.41.
International benchmark Brent crude futures slid 11.55% to settle at $72.72 per barrel.
Both contracts registered their fifth straight week of losses for the longest weekly losing streak since March 2020.
A decrease in travel and potential new lockdowns, both of which could hit demand, come just as supply is about to increase.
OPEC and its oil-producing allies are set to meet on Dec. 2 to discuss production policy for January and beyond. The group has slowly eased the historic output cuts it agreed to in April 2020 as the coronavirus sapped demand for petroleum products. Since August the group, known as OPEC+, has returned 400,000 barrels per day to the market each month.
Reference: CNBC
Thai
Eng